Jakarta –
The Fed or the Central Bank of the United States (US) to raise the benchmark interest rate by 0.75%. The increase in the US benchmark interest rate was carried out when inflation touched 8.6%.
This is expected to make inflation more stable without disrupting economic growth. On the other hand, the Fed must also maintain price stability and maintain the unemployment rate.
This step is also said to be able to disrupt the process of economic recovery in the country. Quoted from Washington PostThursday (16/6/2022), it was stated that the current US stock market was also under pressure amid the threat of a recession.
Rising flowers The Fed affect credit interest rates in the community. Now this will affect credit card interest, car installments, and mortgages. Although the Fed does not directly regulate the interest rate, the interest rate at the bank usually follows the interest rate of the central bank.
Many economic challenges have made the market fearful of entering the brink of recession. However, there are contradictory indicators such as the low US unemployment rate and high public spending.
With interest rates rising, the Fed wants people to hold back on spending and return to saving money until prices start to fall and stabilize.
This interest rate is indeed the main weapon The Fed to maintain the economy. The central bank can lower interest rates and make it cheaper so many people withdraw credit. This can encourage economic activity and boost investment.
When the COVID-19 pandemic hit, the world economy was in crisis, many companies and government offices were closed and there was no economic activity. The Fed cut interest rates to near zero. This is a tactic that central banks used after the financial crisis of the mid-2000s.
This is in order to make interest rates cheaper and consumers easier to get goods. But since coming out of the COVID-19 recession the economy is facing new challenges.
Temporary The Fed raising its benchmark interest rate, inflation in the US is already at its highest level in the last 40 years. Gasoline prices have also surpassed US$5 per gallon. Supply issues have impacted businesses and consumers alike.
Also watch the video ‘Joe Biden Ignores Elon Musk’s Bad Warning About US Economy’:
(kil/arab)
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